Hal Halpin to game pubs: disclose DRM and standardize EULAs

Hal Halpin is fighting the good fight for consumers, and the Entertainment …

The Entertainment Consumers Association is a non-profit started by industry professional Hal Halpin to help consumers understand their rights, while also being a voice for those who buy and play video games in the industry. When the FTC held a conference to discuss DRM, the ECA was there, and at GDC 2009 we chatted with Halpin about that conference and the future of PC gaming. Ultimately, the ECA has two main positions on gaming and copy protection: 1) DRM needs to be disclosed, and 2) End-User Licensing Agreements need to be both simple and standard.

"We suggested a few things to the FTC, one of which was we'd like to see DRM disclosed," Halpin started. "So when people go to the store and buy the packaged good, the PC game, they'll see something on the front of the box saying there is DRM inside, and to what degree it will be invasive."

"The second thing that we recommended was that EULAs get standardized, so again, rather than have 30 or 40 types of agreements, there would be one standard one for all different types of computer games. People go into the store, buy the game, open it, and they can no longer return it... by standardizing the EULA, consumers will have the confidence to know what it is they're agreeing to before they buy the product."

"That didn't go over so well. There was a room of attorneys that kind of gasped when we suggested standardization. One panelist commented that the EULA really were there as consumer information, and that was the one and only time that the FTC jumped in and said 'wait a second, this has nothing to do with consumer information, this is purely IP protection.' I pointed out that when we ran the IEMA (Interactive Entertainment Merchants Association) we were able to get the size of the boxes standardized, and to get the PC CD-ROM logo on the box. These were not herculean undertakings, and they didn't require legislation. So if we can do those things, then certainly we can do these."

How do you tell consumers what kind of DRM is included in the game? Simple: use existing ideas that consumers are comfortable with. "One panelist suggested icons on the front of the box, some sort of logo. You know, you copy what's successful, which is the ESRB: everyone understands than an "M" represents Mature, and if you flip the box over there are descriptors." Someone suggested that the image of a lock be used, so if you see a padlock that's fully closed, you know there is some serious DRM being used in the game. Descriptors on the back could give you more specific information. Halpin's take? Keep it simple so that everyone can understand what's going on with the DRM being introduced to their system.

How do you tell consumers what kind of DRM is included in the game? Simple: use existing ideas that consumers are comfortable with.

"Well, that's certainly my hope. That's why we brought up these two ideas that went over well with the audience, that the transition from disc-based media to digital media over the course of the next three five or seven years... it's essentially going to remove the purchase to own out of the equation, replacing it with purchasing a license. That's how PC games are now, when you go to the store and buy a game, you technically don't own it. That paradigm shift, it's very important for us to get out ahead of it, so with DRM and EULAs, so we can say these are what consumer's rights are, and have an easy way to identify that in the purchasing process."

I bring up services like Steam, but Halpin disagrees with me when I say that buying online may make DRM less of an issue. "No, it's a bigger issue. One of the reasons it's important to get EULAs standardized and DRM disclosed is that when you talk about different systems like Steam, as your example, there are still controls in place. While it's not SecuROM, it's another form of DRM, it's just in a different way. Consumers need to understand that."

So what if these companies no longer are able to support the games? One intriguing bit of news Halpin heard from the FTC meeting was the idea that any company who uses DRM must give keys and access codes to the Federal Trade Commission to hold onto. "In the event of a company going under, the FTC would step in," Halpin told me, keeping the games open and playable. In other words, if you're worried about EA shutting down the servers for Spore, you could trust that the FTC would make sure your game remains playable.

But do you own your games? Not really

The big question with licensed goods, such as PC games, is whether or not reselling the property is a basic right. "The area that you're in is the first-sale doctrine, which doesn't apply to computer software," Halpin replies. "Why? They're using the license model rather than the package-to-own packaged good model... my personal preference is that if you buy something and you own it, you should be able to play it whenever and wherever and on whatever device you want. This is a personal stance, not one the association has."

Halpin didn't seem optimistic about the ongoing ability for consumers to resell their PC games, although the official statement somewhat clarified the association's stance. "The Law, in the area of EULAs in particular, is not as clear as it once was. And the software industry's potential side-stepping of the First Sale Doctrine's protections—by terming their products as 'licensed' rather than 'sold' — leaves us concerned about the future of interactive entertainment, generally."

Halpin doesn't think this stance will stay limited to PCs however; consoles may also begin to offered licensed products. "It may not be next generation, but the generation after that almost certainly will be physical media-free. This next generation of consoles will be way more dependent on digital distribution than it is currently, and it's growing greatly now... I think it's a trend that we'll absolutely see continue, and again when it moves from purchase-to-own to purchasing a license, you're in a whole different area of case law."

What's odd is that this creates an issue for the hardware: without money from software sales, why would retailers choose to sell the systems at all?

"It's totally razors and razorblades, so they have to overcome that first. I wouldn't be surprised if major retailers haven't already discussed this and have something locked down... that's certainly the first major obstacle. The second is: are these first parties so confident in the fact that they can reach the same mass-market numbers that we have in this generation, or more, by not having those retail partners and that availability of physical media. That transition will have to happen over a period of time. This next generation is just too soon."

These are issues we should all be talking about, but we're not. Education is key

"One of the panelists in our discussion was sort of a proponent of DRM being something that everyone understands, that everyone is aware of because of Apple, because of EA, and I had to stop him and say I totally disagree. I think that along the spectrum some publishers are certainly more conservative, and feel that the vocal minority of consumers who spoke up about Mass Effect and Spore represent the 'pirates' and in doing so fanned the flames for a much larger percentage of consumers who now feel like they're not being listened to. A dismissive attitude from the industry probably came back to haunt them in sales," Halpin said. Ars Technica readers make their voices heard when it comes to DRM both in buying decisions and discussions, and the topic was huge at GDC, but for the average consumer? This may be a silent war.

That's why DRM information needs to be front and center. "Disclosure is of paramount importance. People need to know what it is they're buying! We were joking before about information on food [Editors note: we referred to the proposed labels on gaming as "nutritional information" in a previous discussion] but some DRM is so invasive that you're buying a product and you need to know what's inside it, what impact it's going to have and how it may or may not be limiting the rights you believe you have, because there's now way to return it. That's the basis on which the FTC and your readers agree: disclosure, first and foremost."

This is important issue, and I asked Halpin if there are any other goods you can buy, not knowing what the product may do to other goods (your computer) when you use it, and that you can't return. "Not that I can think of. Anything else, if it's defective you can return it." That doesn't work at most retailers, where the employees won't take returns simply because of invasive DRM, if they even know what that term means.

"One of our primary goals, core to our mission, is education," Halpin tells Ars, and he strongly believes that if the FTC and the ECA is able to get this information onto game boxes, along with easy-to-understand, standardized licensing agreements, he can get the necessary information into the hands of consumers so that they can make better buying decisions and know their rights.

Ars Technica would like to thank Halpin for his time, and to encourage you, if you agree with these arguments, to join the ECA. The $20 a year cost (less if you're a student or in the military) gives you many benefits, and shows that you support disclosed DRM, more consumer rights, and a better experience when it comes to buying games. Read about the new Amazon discount as well: the ECA could save you money while fighting for these issues.

So "Purchase to own" is going to go away, eh? No. Just no. I have absolutely no intention of ever buying anything that 1) I can't resell (well, truth be told I've never resold a game I own, but the principle is sound -- I have, however, bought second-hand games)2) The company has a right to forfeit my use of "just because"

Gaming companies have always felt that they own their IP 100% and we should be happy and thanking them profusely for being allowed to play their games. Now they've been bloodied and ridiculed over DRM, so they're going for the even more superior attitude and claiming that they control when and how we get to play their games? Great call, especially at a time when large companies are receiving huge annoyance over what the big shots are getting paid compared to the rest.

Notice, however, that if this change to license purchasing would bring about a 50% drop in price and the destruction of DRM, I'd be the first man in the queue. But I strongly suspect that it'll be the reverse.

It strongly looks like that Big Content isn't seeing any of my money any time soon.

I'm glad that we have someone on our side, thanks Hal Harpin. Stardock Games is also another organisation that seems to understand why consumers get irate at the prospect of DRM and renting software.

I like Hal's idea of having the FTC look after the activation keys, or at least allowed to keep a backup. I mean, the way I see it, if you are going to sell your software on a licensing basis, you need to offer consumers some sort of security on their purchase. As Spiderman says, with great power comes great responsibility (sorry!), so if they want the power to restrict our resales, then they need to provide something in exchange, and I think security on our purchases is the least they can do. They want to have their cake and eat it obviously - no resale for us and no expense for them. I dont think thats fair.

EDIT: That or restricting second hand sales means they have to support additional platforms besides Windows (ie Linux) which as we well know arent nearly as DRM friendly. Mu ha ha ha!

I like the idea of the standardized EULA and mandatory disclosed DRM. Especially the mandatory disclosed DRM. Its funny that, if DRM werent a big deal like they say, you would think they wouldnt mind telling consumers that their software installs hidden device drivers that you cant uninstall, ever. Personally I think it might shame them into removing some of it, because they are also starting to realize it does nothing to prevent piracy. Of course, as we now well know, its really second hand sales that they want to restrict.

More and more consumers are finding out just how nasty DRM is and after all it was never about piracy but about controling your paying customers. Milk the suckers as much as you can. Of course than the disclosure of DRM is bad.

My problem is that a lot of people really like steam and that is even worse. You pay the full price but you don't own shit there. If valve decides to ban you it's bye bye with all the cash you spent. Not to mention you can play only one of the games at the same time despite paying full price (or often even more than in normal stores).

You haven't owned a PC game you've purchased in a long time. It's only just recently there have been effective mechanisms to keep you from reselling it.

Most of the EULAs these days are illegal in Finland (where I happen to live), so I'd like to disagree (one consumer protection official was shown the part where it says you can't sue the game designer or publisher for anything and if they want to sue you they can do so in whatever US state they choose -- he laughed aloud)

But anyway, I bought all of Portal and Neverwinter Nights last year (yes, number one, not two) and mostly play NetHack or consoles anyway. I'm not exactly in the target demographic.

Getting several accounts kinda makes the whole convinience thing go away. Why than pay full/more than full price just to have to relog for every game and mess around? Might as well ignore it and get a normal game from a shop.

Only thing steam has going for it is that it's DRM is not as invasive and doesn't actually mess up the computer. On the other hand it's broken so it's hardly effective against pirates.

There's only one way those of us who want reasonable purchases for our money will get through to the gaming industry, and that's with our wallet.

If we buy a game, and agree to some obscene EULA, even without even reading it, we forfeit progress towards reasonable EULA's. I personally think if the Eula can't be displayed on the box it shouldn't exist because no consumer should have a EULA that requires a lawyer put in front of them for general merchandise such as games.

You'll have to do the same for DRM - quit patronizing DRM titles. If you can't put your money where your mouth is then these companies will gladly gag you with your own money because they love both your money and your unwavering compliance to their whims.

For the average consumer there is no real point in the labels... they simply don't know, don't care, and they 'want'. You could label the box with 'This product may seriously harm your computer' but if their kids 'want' to play Fifa09 (or whatever) they are going to get it anyway.

Shame to see a lot of Steam hate here and a lot of general hate on DRM. Steam for me is the single most convenient digital distribution service there presently is and the fact that it has built in DRM (online activation based, offline still playable) has never even occurred to me.

Ever since it first launched I have had precisely zero complaints with it and I have a whole library of games including ones I purchased on disc that installed into Steam, official Valve games and plenty of 3rd Party games.

Not only have I got all that conveniently at my finger tips whenever I'm ready to go but contrary to previous comments it's extremely cheap and very profitable for the developers as opposed to the resellers!

I recently picked up the Ghost Recon "pack" for about £10 that contains 3 Games and a whole host of expansion packs, I certainly don't feel overcharged in any way. Short of not being able to resell the games I buy (I don't anyway) I don't see the issue, nobody I know has had their account entirely closed the worst I've seen was barred from playing games on VAC Servers.

Not all DRM is bad ... Without wanting to sound redundant - Bad DRM is Bad. You've lived with CD Keys for long enough, it's the same bloody thing if you lose that! Don't expect to be able to install your game in unlimited circumstances :/

This is all simple to fix. I agree that all DRM should be detailed on the box (or online) when the game/software is purchased. It's also appropriate that if DRM of ANY type is used (regardless of the funny names that MS is currently NOT calling theirs); that the permanent release keys be provided to the FTC to be released on their web site should the company go under. On top of that, DRM removal software should be REQUIRED to be provided with each and every game/software package so that when you stop playing/remove it you can effectively remove the DRM from your system WITH NO HARM. That's a must. Furthermore: that all EULAs be in plain language and fit on the back of the box (or single purchase login screen so that it can be printed with your receipt).

Right of first sale...if vendor wants to remove that option for the purchaser they should be required to BUY BACK THE PRODUCT.

Whatever the EULA says, I don't agree to. Furthermore, what binds a license is a contract which must be read, *understood*, and agreed to BEFORE the sale is made.

"That's how PC games are now, when you go to the store and buy a game, you technically don't own it."

Yeah whatever. That room full of lawyers can gasp all they want, yes I do own my software and I will do whatever I want with it for any or no reason, and I will sell it to someone else if and when I decide to.

"One panelist commented that the EULA really were there as consumer information, and that was the one and only time that the FTC jumped in and said 'wait a second, this has nothing to do with consumer information, this is purely IP protection.'"

I rest my case. The EULA is only there for IP protection and has nothing to do with consumer information. The FTC admits that it doesn't expect consumers to even read it and as such can NOT be used as an "agreement" with consumers.

"...that the transition from disc-based media to digital media over the course of the next three five or seven years..."

Oh my goodness, I've been hearing that for years. Just like, "This is the year Linux will take over the desktop!!!1"

Quoted by earl grey:On top of that, DRM removal software should be REQUIRED to be provided with each and every game/software package so that when you stop playing/remove it you can effectively remove the DRM from your system

How about that if I run the uninstall program for that software, it removes it for me, and has to show that it removed it. Why would I want to run a secondary piece of software to get rid of something intended to be removed when the primary software is removed?

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Quoted by earl grey:Right of first sale...if vendor wants to remove that option for the purchaser they should be required to BUY BACK THE PRODUCT.

Originally posted by ZippyDSMlee:Sorry but resell of media is a right and they can not block it without ending the resell of all media we own in physical form.

Sure they can... several types of business and professional software have done this for years. It's called a "licensing agreement".

To some extent, that's what PC software has been in the US for quite some time now (and, to be perfectly honest, it's one of the reasons why PC games are cheaper than their console brethren; the inconvenience of the license is baked into the price).

That being said, unlike professional software, buying PC games is a bit of an asymmetric information problem. If you license something like AutoCAD or SAS, you have relatively good information about what it does, what it will/should run on, etc. well before ponying up the (multiple) thousands of dollars a site license for either will run; you have no such guarantees with PC gaming.

The best way I can think of is a bifurcated release for a PC game; one disc includes all the game data, DRM'ed to all hell, with a self-destruct mechanism for after it has been installed for a certain amount of time, and the second disc, sealed, contains an unlock key that strips the game of most, if not all, DRM.

Such an approach would allow one to return a PC game so long as the unlock disc was unopened... the question is, however, would end users be unnecessarily burdened (they could be re-incentivized to the market through another discount), and would DRM designers be able to keep far enough ahead of the pirates to make such a scheme economically valid?

I have no problem with any copyright mechanism as long as it does, absolutely, nothing to infringe on my right of first sale and my fare use rights (the right to back-up, the right to uninstall and re-install as many times as I want, etc.). By infringing, I include the need to get their permission or inform them of any of this happening such as through the software phoning home.

You haven't owned a PC game you've purchased in a long time. It's only just recently there have been effective mechanisms to keep you from reselling it.

I don't think that's true. IIRC, there's plenty of legal precedent for the fact that if you go to a store and buy it off a shelf, and take it home in a retail package, it's a purchase, no matter what the producer wants to call it.

I also have a hard to time believing the restrictive licensing model will fly very far in the future. If I'm only renting the game, why in the hell would I want to pay full retail for it, when I can get the exact same license from Gamefly for $8?

Originally posted by earl grey:Right of first sale...if vendor wants to remove that option for the purchaser they should be required to BUY BACK THE PRODUCT.

At what price? Fun concept, but unworkable in practice. The original purchase price is unjust because you've benefited from the enjoyment of your purchase over the term of ownership. At the other extreme, you're not likely to be pleased with any depreciation scale the software publisher implements. Any compromise number dictated by the FTC is hopelessly arbitrary and capricious. Finally, the transaction costs of individual compromise buy-back prices between the publisher and each customer would be prohibitive and unworkable. So, how then do we define the proper buy-back price?

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Originally posted by Straight-line:Whatever the EULA says, I don't agree to. Furthermore, what binds a license is a contract which must be read, *understood*, and agreed to BEFORE the sale is made.

Would you care to cite some legal precedent to support this assertion?

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Yeah whatever. That room full of lawyers can gasp all they want, yes I do own my software and I will do whatever I want with it for any or no reason, and I will sell it to someone else if and when I decide to.

Same question.

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"One panelist commented that the EULA really were there as consumer information, and that was the one and only time that the FTC jumped in and said 'wait a second, this has nothing to do with consumer information, this is purely IP protection.'"

I rest my case. The EULA is only there for IP protection and has nothing to do with consumer information. The FTC admits that it doesn't expect consumers to even read it and as such can NOT be used as an "agreement" with consumers.

Non sequitur. You're attempting to prove too much with what the FTC representative said. The FTC said that the EULA defines IP rights, not consumer information. That doesn't mean that the EULA does not serve as the basis for a binding agreement. As another example, Articles 3 and 4 of the Uniform Commercial Code aren't printed on product packaging or your purchase receipt, nor is it reasonable to assume a significant number of consumers have read the UCC, but those laws damn sure governs purchases made by check, and your failure to read them is not an excuse for non-compliance.

Gilgamesh, give me another industry that considers it standard practice to require customers to purchase the product before the "license agreement" can even be read, not alone "signed"? To put it simply, the terms of the product's "license agreement" are only made available inside the product's sealed packaging, and must be purchased before the package can be opened. The retailer and publisher usually refuse a refund if the package had been opened, so unless the there's a clause in the EULA that permits a refund if you refuse its terms, they have your money and your suck with it. It doesn't matter if the product works or even damages your computer either.

So, tell me where it's legal in any industry to conduct business in this manor.

EDIT: I'm not a lawyer either and it's been awhile since I had to read the UCC in college.

First of all, EULAs are already standard. Sure, they may use different wording, but every one contains the exact same restrictions and disclaimers. You don't own the software, you're only licensed to use it. You can't give away copies or install it on more than one system at a time. There's no guarantee that the software will work for you and if it screws up anything, the company can't be held responsible. Shown me a single EULA that doesn't contain all of the above...

Secondly, I really want to know why the software industry is allowed to have ALL the rights and consumers have none. Why are they allowed to disclaim any responsibility for any damages or negative effects resulting from defects in the program? Why is there no guarantee that the program will work as advertised?

If they want the right to control what you do with a piece of software, let's see them step up and take some responsibility for the defective products that they often put out. Until then, they can shove their EULAs.

Originally posted by Gilgamesh:The original purchase price is unjust because you've benefited from the enjoyment of your purchase over the term of ownership

I would have said because you've bought the thing and they have no grounds to take it back, without a court order.

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Originally posted by Straight-line:Whatever the EULA says, I don't agree to. Furthermore, what binds a license is a contract which must be read, *understood*, and agreed to BEFORE the sale is made.

Would you care to cite some legal precedent to support this assertion?[/quote]It's common law going back centuries. Without it being terms of sale, i.e. a binding contract, the store has sold you the game and the publisher is not party to that transaction at all. By hiding the EULA in the box, and by presenting it to you after purchase, and by threatening to deny your use of the product if you disagree, I doubt you could be said to be having a 'meeting of the minds' to make that a valid contract. It's certainly coercive, and maybe outright extortion.

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Articles 3 and 4 of the Uniform Commercial Code aren't printed on product packaging or your purchase receipt, nor is it reasonable to assume a significant number of consumers have read the UCC, but those laws damn sure governs purchases made by check, and your failure to read them is not an excuse for non-compliance.

Those are LAWS. You'd have to be really fucking stupid to think that of contracts. If they don't have your informed consent, there's no meeting of the minds, etc. it's pretty much a given they're fucking the dog by trying to hold this over you. When you sign up for anything the store cares about, such as the protection plan, the store gets your signature and everything, because it's fucking required to be a binding contract. Anyone with half a brain can tell what they think of the EULA, when it's hidden and not presented as terms of sale nor any record taken of you consenting to it.

Originally posted by Straight-line:Whatever the EULA says, I don't agree to. Furthermore, what binds a license is a contract which must be read, *understood*, and agreed to BEFORE the sale is made.

Would you care to cite some legal precedent to support this assertion?

Sure. But I don't need precedent. I have actual law. A license is simply a contract. Both parties to a contract must be aware of the terms of the agreement or there is no meeting of the minds, thus the contract is not enforceable. Just to make it clearer, AMD has a "license" to use Intel's x86 technology in their processors. However that "license" had to be read and agreed to by AMD before they signed the contract (or paper that had the license printed on it) allowing them to make processors incorporating x86 technology. If AMD had not read and agreed to the contract containing the terms of the license *before making x86 compatible processors* they would not be able to make them.

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Originally posted by Gilgamesh:

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Originally posted by Straight-line:Yeah whatever. That room full of lawyers can gasp all they want, yes I do own my software and I will do whatever I want with it for any or no reason, and I will sell it to someone else if and when I decide to.

Originally posted by Straight-line:"One panelist commented that the EULA really were there as consumer information, and that was the one and only time that the FTC jumped in and said 'wait a second, this has nothing to do with consumer information, this is purely IP protection.'"I rest my case. The EULA is only there for IP protection and has nothing to do with consumer information. The FTC admits that it doesn't expect consumers to even read it and as such can NOT be used as an "agreement" with consumers.

Non sequitur. You're attempting to prove too much...That doesn't mean that the EULA does not serve as the basis for a binding agreement....

But it does follow. The panelist explicitly stated that the purpose of the EULA was there for consumer information, but the FTC said the *EULA* has NOTHING to do with consumer info. If the FTC acknowledges that there is no information for the consumer in the "EULA" then why would a consumer read it (note: they don't)?

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Originally posted by Gilgamesh:As another example, Articles 3 and 4 of the Uniform Commercial Code aren't printed on product packaging or your purchase receipt....

Originally posted by RPGSpree:Gilgamesh, give me another industry that considers it standard practice to require customers to purchase the product before the "license agreement" can even be read, not alone "signed"? To put it simply, the terms of the product's "license agreement" are only made available inside the product's sealed packaging, and must be purchased before the package can be opened.

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Originally posted by NW:By hiding the EULA in the box, and by presenting it to you after purchase, and by threatening to deny your use of the product if you disagree, I doubt you could be said to be having a 'meeting of the minds' to make that a valid contract. It's certainly coercive, and maybe outright extortion.

Nonsense. You want to read a EULA without opening a box? It's called the Internet: Apple, Microsoft, and Adobe, as just a few examples, have had the full text of the EULAs for all their offerings available in some form on their websites for over a decade. Before that became common practice, you could request that they send you a copy of the EULA by mail. The fact that the agreement wasn't printed on the outside of the box for you to read it at the point of sale does not mean that you were kept in the dark about its terms.

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Originally posted by NW:

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Articles 3 and 4 of the Uniform Commercial Code aren't printed on product packaging or your purchase receipt, nor is it reasonable to assume a significant number of consumers have read the UCC, but those laws damn sure governs purchases made by check, and your failure to read them is not an excuse for non-compliance.

Those are LAWS. You'd have to be really fucking stupid to think that of contracts.

You're making a false distinction. As anyone who didn't sleep through their first year of law school can tell you, contracts are laws. Agreements with consideration, notwithstanding applicable defenses, are binding on the parties with the full force of law, just like any civil statute. Further, the UCC is, largely, what the law colloquially refers to as a gap-filling statute: Most UCC provisions are laws created with the legislative intent of providing default terms (to fill in the gaps) for certain contracts that otherwise lack specificity in their terms, thereby permitting the parties to rely on those provisions of the UCC as terms of their contract if they so choose. These UCC provisions are enforced with weight equal to any other term of a contract. Hence, there is nothing improper about my analogy.

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Originally posted by Straight-line:Sure. But I don't need precedent. I have actual law. A license is simply a contract. Both parties to a contract must be aware of the terms of the agreement or there is no meeting of the minds, thus the contract is not enforceable.

Mutual assent to an agreement with consideration (the "meeting of the minds") is manifested by the presence of (1) an operative offer, and (2) voluntary acceptance of that offer. Mutual assent is measured objectively, using the reasonable person standard, not subjectively. Therefore, in order to prevail in your argument that no breach occurred for lack of mutual assent to a contract, you must show, through admissible evidence, that a reasonable person in the licensee's position would have either (1) been unaware that an offer to license existed, despite the warning on the box that the software inside was subject to a EULA, the terms of which are publicly available for all to read on the publisher's website, or (2) been unaware that opening the box (or tendering payment at the register, or installing the software, or whatever other act of acceptance defined in the EULA and/or on the product packaging) manifested acceptance of that offer.

Your subjective belief about the terms of the agreement, or the mode of offer and acceptance, are irrelevant (it may be relevant to unilateral mistake, which is an imperfect defense to breach in some jurisdictions, but this is an affirmative defense independent from the existence of mutual assent). So no, you haven't provided any legal or factual basis to support your assertion. Try again?

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Originally posted by Straight-line:

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Originally posted by Gilgamesh:

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Originally posted by Straight-line:Yeah whatever. That room full of lawyers can gasp all they want, yes I do own my software and I will do whatever I want with it for any or no reason, and I will sell it to someone else if and when I decide to.

Oh, where to begin. First, what you have linked there is not even a final judgment on the merits, it's a trial court judge's dismissal of a motion to dismiss, which in no way constitutes binding precedent on other courts, nor does it constitute an authoritative statement of the applicable law.

Second, even if, for sake of argument, the order you're relying on was valid precedent, it doesn't support your argument because it's easily distinguished on its facts. The hypothetical we are discussing here in the thread is a situation where you purchase a copy/license of a new piece of software. In the Vernon case, Vernon obtained his copies of the software not from Autodesk or through an authorized distributor, but from an Autodesk customer who, in violation of its license with Autodesk, sold to Vernon copies of an older version of the software it was obligated to retain as a condition of its upgrade license for the new version. The Vernon case is still ongoing, and Autodesk just filed a motion for summary judgment against Vernon last month, but irrespective of the outcome, the facts of the case simply do not support your argument here.

Third, the the overwhelming body of case law belies your assertion, and instead stands for the proposition that the first-sale doctrine is not implicated by properly drafted EULAs. See, e.g., MDY Industries, LLC v. Blizzard Entertainment, Inc., No. CV-06-2555-PHX-DGC, 2008 WL 2757357, at *8 (July 14, 2008 D. Ariz.) (finding contributory copyright infringement and noting that “[t]he resolution of [the Section 117] issue is controlled by Ninth Circuit law. At least three cases—MAI, Triad, and Wall Data, Inc. . . . hold that licensees of a computer program do not 'own’ their copy of the program and therefore are not entitled to a section 117 defense”).

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Originally posted by Straight-line:

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Originally posted by Gilgamesh:(IAAL, but I'm not your lawyer.)

Good, I wouldn't hire you anyway.

Quite alright with me, I prefer not to take on rude, self-righteous, ignorant, amateur pseudo-lawyers as clients.

Originally posted by Gilgamesh:have had the full text of the EULAs for all their offerings available in some form on their websites for over a decade

They have no clue whether or not the customer has been presented with them before purchase, and most have not. It's not informed consent. Your 'failure' to read them is certainly evidence of uninformed non-consent.

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The fact that the agreement wasn't printed on the outside of the box for you to read it at the point of sale does not mean that you were kept in the dark about its terms.

That seems contradictory to me. Most purchases of this kind have no terms in the box or on the internet, so why should anyone assume that they exist to go look for them? You also can't say that putting them on a web page is any evidence of an agreement to them.

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Agreements with consideration

What consideration? I paid money to the retailer for the software in a separate transaction which the publisher is not party to. Their 'license' would be between the publisher and me, not involving the retailer. Where, exactly, is the consideration in the license? Letting me use the product I bought from someone else? That's extortion.

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These UCC provisions are enforced with weight equal to any other term of a contract. Hence, there is nothing improper about my analogy

These aren't the UCC provisions (i.e. the LAWS) we are talking about. We're talking about a contract, and without any kind of informed consent or meeting of the minds there is none.

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that a reasonable person in the licensee's position would have either (1) been unaware that an offer to license existed,

They need no license to use the product, having bought it, so why are you assuming they'd take the offer if they knew about it? What you want is to show that they knew what terms of sale existed and that they had agreed to them. Usually anyone who cared about that would have a signed receipt or warranty card to show for it.

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hold that licensees of a computer program do not 'own’ their copy of the program and therefore are not entitled to a section 117 defense”).

Originally posted by NW:They have no clue whether or not the customer has been presented with them before purchase, and most have not. It's not informed consent.

Wrong legal standard. Informed consent may be relevant if you're talking about a medical malpractice case, but in a prima facie case for breach of a unilateral contract the party asserting breach need merely prove, by a preponderance of the evidence, that the allegedly breaching party's actions objectively manifested assent. In other words, irrespective of her subjective beliefs regarding the existence or terms of a contract, if the evidence shows that a reasonable person in the allegedly breaching party's position would have understood that an operative offer existed, and that the actions taken would manifest acceptance of that offer, then a valid contract exists. It is no defense for the party in breach to claim that she never intended to be bound by the agreement if under all the circumstances it is shown at trial that her conduct was such that she had in fact agreed.

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Agreements with consideration

What consideration? I paid money to the retailer for the software in a separate transaction which the publisher is not party to. Their 'license' would be between the publisher and me, not involving the retailer. Where, exactly, is the consideration in the license? Letting me use the product I bought from someone else? That's extortion.

No, that's consideration. In this context, a EULA is a unilateral contract. In unilateral contracts, there is no requirement that acceptance be communicated to the offeror. The offeree accepts by performance, and the offeree's performance is also treated as the consideration for the offeror's promise. For example, with a click-wrap license, your performance is objectively manifested by your clicking "I agree" (or whatever the button says) when presented with the EULA, and gaining the benefit of using the software.

Operative offer: Publisher provides, through a distributor, boxed copies of software for license to consumers. The terms of the license are certain and publicly available.

Acceptance: Consumer brings the software home, unwraps and opens the box (objective manifestation of assent for a shrinkwrap license), installs the software, and clicks on "I agree" when presented with the EULA (objective manifestation of assent for a clickwrap license). The consumer then uses the program (enjoyment of benefit under the contract). Since this is a unilateral contract, the offeree's performance satisfies acceptance and consideration. Barring some other defense outside of the present discussion, there exists a valid contract.

Right Gilgamesh, showing that three companies post their EULAs online proves that all are publicly available... That's completely beside the point anyway, because if there are any differences between the online and "click-wrap" versions of the license, it's the terms "click-wrap" version that stand as it is that version that the user is asked to agree to. Any other copies are only for reference, especially since those published online can be changed without the user's consent.

Also, you missed the point that if the terms of the license are found to be disagreeable after the purchase, as it's the copy in the box that the user is legally obligated to anyway, the purchase is rarely refundable.

Hey Gilgamesh, I just sold you my car on a Sunday and handed you a bill of sale (aka receipt, which is all you get when buying software). Only after you bought it you open the glove box and see a contract that says you can only drive it on weekends. Being the lawyer that you are, you read it and notice a clause that says, "By buying this car you agree to the terms of this contract." You try to return it to me but I refuse, quoting the previously mentioned clause and directing you to my website which has a copy of the contract you found in the glove box, and mentioning that you should have done your due diligence by going to my website and searching around for any terms that might exist before buying.

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It is no defense for the party in breach to claim that she never intended to be bound by the agreement if under all the circumstances it is shown at trial that her conduct was such that she had in fact agreed.

By your reasoning I've got your money and you have a car that you can only drive on the weekend and you can't do anything about it. Your conduct of buying the car showed that you agreed to the contract.

Please tell me you find this scenario not only totally offensive, but incredibly unjust?

Originally posted by RPGSpree:if there are any differences between the online and "click-wrap" versions of the license, it's the terms "click-wrap" version that stand as it is that version that the user is asked to agree to.

If the terms of a shrinkwrap license differ from those posted on the website, I think the putative licensee has a good defense. For a clickwrap license, the defense isn't quite as good, since the terms were still right in front of you before you clicked to accept them, but one may still have a good faith argument in litigation. As a practical matter, however, software companies and their lawyers are quite careful to ensure the language on their websites matches that in the product box or on the click-wrap screen.

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Also, you missed the point that if the terms of the license are found to be disagreeable after the purchase, as it's the copy in the box that the user is legally obligated to anyway, the purchase is rarely refundable.

The purchase at the point of sale is a separate transaction, between retailer and consumer, independent from the contractual relationship between licensor and licensee. Blaming a EULA, or software licensing in general, for a retailer's return policy is, quite frankly, woefully ignorant.

Let's use Adobe Photoshop as an example again: You walk into Fry's and buy a copy of Adobe Photoshop. You get home, open the box, install the software, click "I accept" when confronted with the click-through EULA, and use the software. A week later, you decide to actually read the EULA, after which you decide "I don't like these terms, I want to return the software." You uninstall the software (let's assume you're not willing to pirate the software, since if we are to assume that you're a scofflaw, this whole discussion is moot), you put all the materials back in the box, and drive to Fry's. Fry's refuses to refund your purchase.

Is it Adobe's fault Fry's won't refund your purchase? No, Adobe and the license agreement between you and Adobe have nothing whatsoever to do with Fry's refusal to take back your copy of Photoshop and refund your money. So, are you screwed? Well, let's look at Adobe's return policy:

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To return an Adobe product or support contract that you purchased from a retail store, you must first try to return the product to the store.

If the retail store won't accept the return, Adobe will refund the purchase of the product under the following circumstances:

* You contact Adobe to request the return within 30 days of the purchase * You purchased the product from a store in North America * The store refused to accept the return

Note: Adobe doesn't refund shipping charges for products purchased from a retail store.Return a product for a refund

To return a product purchased from a retail store, please do the following steps:1. Contact Adobe Customer Service with the following information:

* The order number * Your name * The product being returned * The serial number, if applicable * The reason for the return * The name and location of the retail store * The reason the store provided for refusing to accept the return * A copy of the store receipt showing proof of purchase

2. The Customer Service representative will request that you do one of the following:

* If the purchase price of the product before tax is less than US$800 don't return the product to Adobe. Instead, print and complete a Letter of Software Destruction, and return it to the address or fax number listed on the letter. (Be sure to tell Customer Service if you prefer to receive a copy of the letter by mail or e-mail.) * If the purchase price of the product before tax is greater than US$800, Customer Service will provide you with a Return Merchandise Authorization (RMA) number so that you may return the product to Adobe.

Note: You have 30 days from the date that Adobe issues the RMA to return the product to the Adobe warehouse. RMAs remaining in Adobe's system past the 30-day limit are cancelled.

Gee, looks like all you have to do is call up Adobe, follow a straightforward RMA process, and they'll happily refund your money. Now, is Adobe some great altruist in the software industry? Let's check Microsoft's return policy:

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All software and hardware products that you purchased in the United States or Canada (North America) come with a Microsoft 45-Day Money-Back Guarantee. Microsoft will refund your purchase price subject to policy guidelines and warranty and license agreement provisions....

45 days! Microsoft, some say the greatest evil since the Nazis, gives you 15 days more than Adobe to return its products!

Gosh, those software licenses are screwing you out of so much money!

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Originally posted by Straight-line:*snip*false analogy about car sale*snip*

Please tell me you find this scenario not only totally offensive, but incredibly unjust?

Your analogy departs from the reality of software licensing in several significant ways: (1) Licenses are not sales, and thus are not subject to the first-sale doctrine (see case law I cited in my previous post), so the contractual relationship between licensor and licensee differs in material legal ways from the seller and buyer of the car; (2) EULAs are publicly available to read prior to purchase, whereas your "contract" in the glove box was not, at least as explained in your scenario, available prior to my purchase; (3) as explained above, software publishers offer return policies in the event your retailer refuses a refund, while your analogy neglects to take the manufacturer-user relationship that exists in software: a slightly more accurate (although still intrinsically flawed) scenario for your car would be that, in the event you refused to refund me the purchase price of your car, I could RMA it to the auto manufacturer for a full refund.

For what it's worth, I'm not trying to make a value judgment here. Some software license agreements have terms more preferable to you than others, but the same can be said for virtually any other voluntary, contractual relationship you encounter in your life.

What I am trying to introduce in this thread is a bit of the law, and some basic common sense, about how to deal with software licenses, because as a lawyer who works with both software developers and their licensees, I find the willful ignorance that some people have regarding how licenses work (e.g., "you can't return software, and you're screwed the moment you unwrap the box!") to be unhelpful.

Like Issac Asimov said, "If knowledge can create problems, it is not through ignorance that we can solve them."

I don't get you, Gilgamesh. You repeatedly refer to EULAs as contracts but then argue that contract law doesn't apply and that the buyer doesn't even need to be aware of the terms of the license to be held liable for breaching the contract he never agreed to in the first place.

And yes, in my fake analogy the contract was publicly available on my fake website for you to read.

Here: "In this context, a EULA is a unilateral contract. In unilateral contracts, there is no requirement that acceptance be communicated to the offeror. The offeree accepts by performance, and the offeree's performance is also treated as the consideration for the offeror's promise. For example, with a click-wrap license, your performance is objectively manifested by your clicking "I agree" (or whatever the button says) when presented with the EULA, and gaining the benefit of using the software."

There was no agreement before the sale was made. There was no negotiation before the sale was made. No promise was offered and no terms were set forth before the sale was made. You argue that EULAs are contracts, but the very act of buying software before reading, agreeing to, or even being aware of any terms that might be included shows that there was no "meeting of the minds". Also the only "offer and acceptance" was 'I give you $50, you give me that game'. Furthermore, "good faith" can't possibly be established before the sale since the buyer has no idea what terms exist.

Just as I can not put a contract in the glove box (that you most likely would never have seen before buying) that restricts you from driving on weekdays, post a copy of it on my website, and therefore legally stop you from ever driving during the work week, companies can not dictate terms to the buyer after the sale has been made.

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Originally posted by Gilgamesh:Licenses are not sales, and thus are not subject to the first-sale doctrine....

Hahaha, that makes me laugh every time it's brought up. "This software is not sold! Want to buy it?"

Wow Gilgamesh, quoting only two EULAs this time? That's quite a defense! Again, two EULAs are not representative off all EULAs. Also, I never said who would refund the money. You just started ranting under the assumption that I meant the retailer. And yes, I know that some publishers will issue refunds, as I've had to call them. A lot of them however will just give the brush off, saying that it'll be fixed in the next patch or that will be in the next version. Some will even just come out and say that they're not responsible for what the marketing department puts on the box! You can defend these guys all you want, but it doesn't change anything.